Automotive – Technology Transactions Todayhttps://www.techtransactionstoday.com
Insights, tips and trends in technology transactions from the country’s leading technology lawyersMon, 18 Feb 2019 09:00:39 +0000en-UShourly1https://wordpress.org/?v=4.9.9https://emergingcompanyexchange.foleylardnerblogs.com/wp-content/uploads/sites/5/2018/04/cropped-foley-site-icon-32x32.pngAutomotive – Technology Transactions Todayhttps://www.techtransactionstoday.com
32323D Printing Continues Making Inroads in Auto Industryhttps://www.techtransactionstoday.com/2018/09/20/3d-printing-continues-making-inroads-in-auto-industry/
https://www.techtransactionstoday.com/2018/09/20/3d-printing-continues-making-inroads-in-auto-industry/#respondThu, 20 Sep 2018 08:00:25 +0000https://www.techtransactionstoday.com/?p=2377
Additive manufacturing (aka 3D printing) has long been a growing part of the auto industry. Companies started out using 3D printing for prototypes and small batch production. As technology advanced, the role of 3D printing is rapidly increasing. This week, several major players in the auto industry announced new developments for the role of 3D...… Continue reading this entry]]>

Additive manufacturing (aka 3D printing) has long been a growing part of the auto industry. Companies started out using 3D printing for prototypes and small batch production. As technology advanced, the role of 3D printing is rapidly increasing. This week, several major players in the auto industry announced new developments for the role of 3D printing in the industry. HP unveiled its “Metal Jet” 3D printers, which it describes as 50 times more productive, with lower operating and purchase costs than existing technology. HP has already partnered with suppliers in the auto industry on the technology, and GKN Powder Metallurgy is already using the printers in its factories.

VW is an early adopter of the Metal Jet, and its personalized gear shift knobs are already being printed using the Metal Jet. This week, VW announced additional plans to increase its 3D printing to further integrate printed parts into its overall manufacturing. VW is aiming for 100,000 printed parts in its supply chain each year.

VW has a history of pioneering in 3D printing. VW started 3D printing in 2014 in its Autoeuropa plant in Portugal, and in 2017, its related case study on 3D printed tooling that won awards throughout the world. And it has already had success with the Metal Jet run, according to the announcements this week. With the Metal Jet, VW did not need custom tooling for its personalized gear shift knobs, and it’s saving VW lead times and manufacturing costs.

As detailed in Deloitte’s Additive Manufacturing series, 3D printing has a long term growth trajectory in the auto industry. It presents opportunities for faster innovation in the industry, and faster time to market with changes. How far 3D printing will infiltrate the existing supply chain—and its limitations–has yet to be seen, but in August, Global Markets Insights, Inc. released a report projecting additive manufacturing, in the automotive market would exceed $8 billion by 2024. For now, HP, VW, and similar companies are leading the charge on making 3D printing part of their standard manufacturing process.

]]>https://www.techtransactionstoday.com/2018/09/20/3d-printing-continues-making-inroads-in-auto-industry/feed/0Autonomous Co-Pilot: How GM Plans to Revolutionize Consumer Use of Autonomous Driving Technology While Keeping You Focused at the Wheelhttps://www.techtransactionstoday.com/2018/07/25/autonomous-co-pilot-how-gm-plans-to-revolutionize-consumer-use-of-autonomous-driving-technology-while-keeping-you-focused-at-the-wheel/
https://www.techtransactionstoday.com/2018/07/25/autonomous-co-pilot-how-gm-plans-to-revolutionize-consumer-use-of-autonomous-driving-technology-while-keeping-you-focused-at-the-wheel/#respondWed, 25 Jul 2018 08:00:23 +0000https://www.techtransactionstoday.com/?p=2362
In the competition amongst automobile manufacturers to knock autonomous driving out-of-the-park, Cadillac is next up to the plate. Recently – rolling-out its newest autonomous driving technology – General Motors (“GM”) announced, beginning in 2020, “semi-autonomous” driving will be available in all Cadillac models. Dubbed “Super Cruise,” the technology is GM’s latest attempt to capture some...… Continue reading this entry]]>

In the competition amongst automobile manufacturers to knock autonomous driving out-of-the-park, Cadillac is next up to the plate. Recently – rolling-out its newest autonomous driving technology – General Motors (“GM”) announced, beginning in 2020, “semi-autonomous” driving will be available in all Cadillac models. Dubbed “Super Cruise,” the technology is GM’s latest attempt to capture some of the autonomous driving market share Tesla currently dominates.

While Super Cruise is still a hands-free technology, GM recognizes a need to shift drivers away from relying solely on autonomous driving technology and more toward driver awareness. Different from fully-autonomous driving technology in other vehicles, Super Cruise contains highly demanded safety features to ensure drivers remain engaged with the vehicle’s surroundings – even when not directly controlling the vehicle. Specifically, the Super Cruise technology requires that drivers respond to cues confirming their attention to the roadway – with failure of such confirmation disengaging Super Cruise. In light of recent, highly publicized, vehicle accidents involving autonomous driving technology, the Super Cruise safety features may be exactly what the market is demanding. Interestingly, Elon Musk – of Tesla – rejected implementing similar safety features on Tesla vehicles over concerns of accuracy. If GM has accomplished accuracy of driver awareness with this technology, Super Cruise has the potential to set the industry standard for future autonomous driving technology. Although some drivers purchase autonomous driving technology to increase comfort, and reduce effort and personal attention needed toward the roadway, the safety of surrounding drivers – and pedestrians – requires a balance of both comfort and attention, and Super Cruise promises to deliver this balance.

GM is rolling-out additional new technology platforms in Super Cruise enabled vehicles. Dubbed “Vehicle-to Everything” (“V2X”), GM’s new technology will allow vehicles to share communications between each other – allowing for heightened road safety and driver efficiency. V2X vehicles will share information regarding traffic jams, road hazards, and even the prevention of accidents. The implementation and specifics of V2X technology awaits further reveal, but pairing V2X with Super Cruise is an exciting venture for both GM and its customers. At the moment it remains unclear whether drivers will be permitted to opt-out of V2X or whether it will be standard on each Super Cruse vehicle.

Further, GM plans to roll out the Super Cruise technology across its other platforms and brands at a later point. With highways already mapped and loaded into the technology, the rollout of the technology to other GM platforms can be done efficiently. GM seems to be making a heavy play at the autonomous driving space and a successful launch of Super Cruise will disrupt the market. The future of GM’s autonomous driving program will be largely influenced by consumer acceptance of Super Cruise, but consumer acceptance could establish GM as a long-term powerhouse in the autonomous driving technology space. Whether the Super Cruise technology sets the bar as an industry-wide safety standard remains to be determined, but it is sure to make an impact on the short-term future of autonomous driving technology and the way consumers drive vehicles.

Please note Foley Summer Associate, Chris Struble was a contributing author of this post. The Dashboard Insights team thanks him for his contributions.

]]>https://www.techtransactionstoday.com/2018/07/25/autonomous-co-pilot-how-gm-plans-to-revolutionize-consumer-use-of-autonomous-driving-technology-while-keeping-you-focused-at-the-wheel/feed/0Recharging Electric Vehicle Incentive Limitshttps://www.techtransactionstoday.com/2018/07/12/recharging-electric-vehicle-incentive-limits/
https://www.techtransactionstoday.com/2018/07/12/recharging-electric-vehicle-incentive-limits/#respondThu, 12 Jul 2018 08:00:24 +0000https://www.techtransactionstoday.com/?p=2355
Recently, Representative Peter Welch of Vermont introduced legislation restructuring the planned phase out for the current electric vehicle $7500 federal tax credit. As has been discussed in great detail in this blog, the current electric vehicle incentives begin to phase out individually for each manufacturer when that manufacturer delivers its 200,000th electric vehicle. As a...… Continue reading this entry]]>

Recently, Representative Peter Welch of Vermont introduced legislation restructuring the planned phase out for the current electric vehicle $7500 federal tax credit. As has been discussed in great detail in this blog, the current electric vehicle incentives begin to phase out individually for each manufacturer when that manufacturer delivers its 200,000th electric vehicle. As a policy mechanism, the federal electric vehicle tax incentives positively influence both consumer and automotive manufacturer market behavior. When implemented correctly, consumers will shift toward purchasing eco-friendly electric vehicles and manufacturers will ramp up electric vehicle research and development, ultimately leading to higher production volumes. By combining the benefits to both consumers and manufacturers, these incentives can build a trend toward a growing and ultimately sustainable electric vehicle market devoid of any external incentives.

The aforementioned proposed legislation calls for the abolishment of the 200,000 delivery threshold in the current policy regime, freeing market leaders from what would otherwise be a sudden financial disadvantage to both them and their customers when compared to other electric vehicle sellers and the reintroduction to the financial gap between electric vehicles and their gas-powered counterparts.

While initially intended to award early adopters, in one perspective, the current 200,000 delivery threshold is now a penalty directed to other early adopters in the electric vehicle market. The electric vehicle market is still in its infancy and current buyers are still generally first-time EV owners and should be thought of as early adopters. Under the current tax credit structure, once the 200,000 delivery threshold is crossed, customers of Tesla and GM, which will be the first to hit the phase out, will no longer be eligible for the same tax credit that they could otherwise receive if they purchased a competing electric vehicle. Thus, the phase out punishes the early adopters who are just a little bit too late to the game and forces them away from the EV industry leaders to either less competitive EV models or away from electric vehicles altogether. Instead, an incentive structure that further bolsters the market leaders at this early stage may help promote stronger R&D efforts from the lagging manufacturers than subsidizing substandard market entrants. However, with the current structure, the current electric vehicle tax credit structure penalizes the innovative market leaders and rewards those companies watching from the sidelines.

The proposed legislation does away with the current 200,000 delivery threshold and imposes a broad 10-year limit on the electric vehicle incentive. Additionally, the legislation would change the electric vehicle incentive from a tax credit – what it is currently – to an instant rebate. This way, consumers instantly realize the benefits of the electric vehicle incentive and are not forced to wait until tax time to realize the electric vehicle incentive savings. This move should open up access to electric vehicles to people further down the income ladder who no longer have to float the government the $7500 they are ultimately owed back after tax day. While Tesla expected to cross the 200,000 delivery threshold this quarter, it still has not offered its shorter range $35,000 Model 3 for sale, which promised to bring the Model 3 to price point for the masses. The combination of the entry-level model with its still livable range and the immediate incentive may finally be what is needed to cement EVs as an alternative for the masses, rather than the fringe who are wealthy, drive only locally, or both.

The newly introduced legislative text will become available in the coming days and has already been referred to the House Committee on Ways and Means. Interestingly, the electric vehicle tax credit, which survived an earlier repeal attempt this year, may see the pendulum swing fully in the other direction. One thing to keep an eye on when reading the legislative text is whether the new credit is refundable or if consumers will be required to have at least a $7500 tax liability to take full advantage of the electric vehicle incentive. While the credit acts as a subsidy to the manufacturers, allowing them to sell their vehicles at a higher price than gas-powered equivalents, a refundable tax credit could have even larger impacts on the consumer market. With some quick calculations, a couple filing jointly and taking only the standard deduction would have to earn almost $64,000 to realize the full value of the credit. About 60% of American families fall below this threshold, so shifting the incentive to a refundable credit would newly open access to the credit for tens of millions of new consumers.

As Representative Welch declared, “[w]e are in a race for the winner of the technology for electric vehicles and this credit is going to help spur that.” Keep an eye on the legislation as it passes through the committee process.

Please note Foley Summer Associate, Chris Struble was a contributing author of this post. The Technology Transactions Today team thanks him for his contributions.

]]>https://www.techtransactionstoday.com/2018/07/12/recharging-electric-vehicle-incentive-limits/feed/0Michigan Doubles Down on Mobility and Announces a new Eight Million Dollar Grant Programhttps://www.techtransactionstoday.com/2018/07/05/michigan-doubles-down-on-mobility-and-announces-a-new-eight-million-dollar-grant-program/
https://www.techtransactionstoday.com/2018/07/05/michigan-doubles-down-on-mobility-and-announces-a-new-eight-million-dollar-grant-program/#respondThu, 05 Jul 2018 08:00:00 +0000https://www.techtransactionstoday.com/?p=2336
Michigan, the cradle of the American automotive industry, has made no secret of its desire to remain an industry leader in mobility as the industry continues to evolve. On May 30, 2018, Michigan announced a new $8 Million Michigan Mobility Challenge grant that would be available to fund new mobility projects across the state. The...… Continue reading this entry]]>

Michigan, the cradle of the American automotive industry, has made no secret of its desire to remain an industry leader in mobility as the industry continues to evolve. On May 30, 2018, Michigan announced a new $8 Million Michigan Mobility Challenge grant that would be available to fund new mobility projects across the state. The “mobility industry” is a term of art, the exact definition of which often depends on who is being asked. Generally speaking, the term is used to refer to a variety of products and services involved in the business of how people get around, including everything from traditional automotive manufacturers, to ride hailing apps, to autonomous public transportation.

The Michigan Mobility Challenge grant follows on the heels of other recent actions by the state to position itself as a destination for the next generation of mobility industry companies. Among other things, Michigan has enacted legislation to allow autonomous vehicles on its roads, revised the regulatory framework applicable to ride hailing companies such as Uber and Lyft, and approved tens of millions of dollars in funding for the new American Center for Mobility, a 500-acre proving ground for driverless cars and other new technologies.

In its latest initiative, Michigan is making available $8 million in grant funding for pilot mobility projects aimed at filling unmet needs in the current transportation system. Specifically, Michigan Department of Transportation (MDOT) is looking for mobility solutions that target issues facing seniors, persons with disabilities, and veterans. MDOT is looking to fund a diverse portfolio of pilot projects that it hopes can give rise to financially sustainable services after the pilot phase is complete. Grants awarded under the program are intended to fund only part of the project during the pilot phase, with MDOT expecting the balance to come from other funding sources (including fares).

Proposals will be scored by MDOT (with input from various other agencies) in the first instance on a variety of factors, including: (1) clarity of the mobility gaps that they are intended to address; (2) innovation; (3) methods for recruiting/supporting the targeted population; (4) financial sustainability of the service after the demonstration period; (5) coordination efforts among different mobility partners; (6) utilization of existing transportation networks; (7) evaluation and plan/metrics; (8) capacity and experience of the proposal team; and (9) overall completeness and quality of the proposal.

For those proposals that make it through to the second round, final selections will be made based on MDOT’s desire for diversity in the mobility options and technologies that will be used, as well as diversity in the geographic areas and populations targeted by the proposal. MDOT’s desire to fund multiple projects also means that the funding available for any given project will be limited. In its Call for Projects, MDOT notes that it does “not envision funding multiple projects over a million dollars each.”

Anyone interested in submitting a proposal for consideration will have to act fast. Proposals for projects are due by July 16, 2018. Instructions and details regarding the program are available on the MDOT website.

That was the underlying premise of Foley’s “Emerging Automotive Technologies: Tomorrow’s Trends Today” program, held May 22, 2018, at Foley’s Boston office.

Nearly 100 industry leaders, entrepreneurs, investors and legal advisors attended the forum to glean insights from three panels of distinguished experts on such topics as how to protect IP assets in the connected-car space, financing and raising capital, and prospective legislative and regulatory changes affecting autonomous and connected cars.

Attendees also were treated to a keynote address by Internet pioneer and technology entrepreneur Dan Harple, who talked about using blockchain technology to make the global automotive supply chain more transparent, more secure, and more accountable.

Following are the highlights of those discussions.

Protecting Emerging Technologies Transforming Mobility

Ben Horst, co-founder and president of Eddy Motorworks, an Atlanta-based startup that makes custom electric cars, and Isaac Wittenstein, co-founder and CEO of TEQ Charging, another Atlanta-based startup that makes a power management system for charging electric cars, kicked off the program with a session on protecting emerging technology, particularly in the automotive space.

Foley partner John Lanza, who moderated the session, said it’s hard to talk about IP in this space without talking about legislative impact and, to a large extent, about investment in infrastructure supporting connected cars.

Wittenstein said his company is working to make electric vehicle charging stations profitable for the properties that need to be purchasing them, such as apartment complexes, condominiums, airports and work places.

He said his company’s core IP is in the algorithms it uses to distribute power between stations, depending on need and availability. Another IP issue he identified is the company’s brand, so that people know how to use its services and it can educate them about its product.

So, while the company is working on hardware – charging stations – the IP it is seeking to protect is in the software space on top of that hardware, he said.

“We think of ourselves as a software company and that’s really where the value is,” he said.

Horst said that a lot of his company’s IP is process-based. Horst likened his main business – classic car conversions – to the hot rod industry that came about after the first automobiles were sold. “Electric hot rods is kind of a way to think of what we do,” he said. His company doesn’t manufacture motors or assemble batteries. Instead, it puts refurbished parts from other cars together into an integrated vehicle.

“A lot of that is really just a trade secret kind of protection strategy,” he said. “A lot of this is figuring out how to use the components.”

While electric cars still comprise only a small percentage of the vehicles on the road, Wittenstein said that is likely to change when the cost of batteries, which are now about $200 per kilowatt hour, drop to about $100 per kilowatt hour in the next five years or so. On the infrastructure side, another big factor will be making sure people don’t have to fear where they’ll be able to recharge their vehicles.

Horst said there is also a mindset challenge that must be overcome. He cited the negative reaction he got when he took an electric race car his company had built to a racetrack in Georgia, though everyone who got into the car ended up loving it.

“There’s a lot of people who still just don’t want anything to do with [EVs],” he said.

Lanza said that begs the question: Are electric cars the future or a future?

Horst said he thinks they are the future, as long as they start looking more attractive, because nobody wants to buy an ugly car. Wittenstein also said wireless charge will be one of the key things that will enable that to happen.

“Even if the U.S. doesn’t go that route as quickly, China is far outpacing the U.S. in almost all aspects of automotive, and electric is one of the biggest ones they’re outpacing us in,” he said.

Investment Strategies in Private Equity & Venture Capital

The second panel of the day moderated by Foley partner Dave Kantaros, featured Rob Infantino, the founder and CEO of Openbay, an online marketplace that allows consumers to find, compare, book and pay for automotive repairs and services, and Anish Patel, co-founder and general partner at transportation-focused venture firm Blue Victor Capital, who discussed financing and investment strategies in the auto space.

Infantino opened the session by describing how an unpleasant personal experience with an automotive service center inspired him to start Openbay. He said he had taken his car to get a simple wheel alignment and was handed a 12-page estimate of recommended repairs totaling $4,000.

Needless to say, Infantino, who knows something about cars, having spent two years working on a stock car pit crew during college, left without having his car serviced. Then he set his mind to changing the auto repair industry, which he said has been “stuck in time for decades.”

Patel explained how he went from working for two strategic corporate venture capital firms to helping launch a traditional institutional fund. He said he had spent the majority of his career at GM, the last four years as an investment manager at GM Ventures, where he was responsible for 10 direct investments in transportation-related startups with in-vehicle applications.

He left GM in 2014 to help SAIC Capital, China’s largest automaker, open its venture capital office in Menlo Park, California. Recently, he left SAIC Capital to help start his own fund, mostly because he thought they were missing a lot of opportunities on the corporate side.

“There are a lot of great deals we see in the transportation mobility space that we weren’t allowed to participate in or invest in because our engineering teams didn’t sign off or we had some sort of internal bureaucracy that was preventing us from making these great investments,” he said.

Infantino said his experience raising capital has been mixed. He personally financed the company for the first two years, then took in angel money from local investors in Boston. He also took capital from Google Ventures and Andreessen Horowitz. Aside from those two firms, however, he said he’s had a lot of success with individual angel investors and boutique firms, but “zero” success with your typical Tier 1 VCs in Boston.

“I can’t tell you how many meetings I’ve been to where I’ve gotten no’s across the board over the last few years,” he said.

He said the reason was a combination of the audience not understanding automotive and the stage of his company. He also said Boston’s venture capital community is very conservative and very risk averse, and that a lot of his peers have gotten the same response he has. And he added that the entrepreneurial community would not exist if it wasn’t for the angel network in Boston.

Infantino said he advises his peers to stop taking meetings with Boston VCs and instead try to tap into the city’s angel network. If that doesn’t work, he said they should turn to Manhattan. And if that doesn’t work, they should go west and stay west, where they most likely will get funded.

Patel said the investment criteria he is looking for includes the team, the technology and the stage. But in the later stage, it’s mostly about the team and the CEO and how well they can execute on the plan, establish a customer base, and meet the metrics they outlined before.

When it comes to a right of first purchase provision, Patel said, it’s up to the board and the management team of the company to negotiate that out.

Infantino said he tries to stay away from non-U.S. investors because they tend to take up a lot of his time, ask for everything under the sun, and end up not investing.

Patel said he thinks there are still plenty of opportunities for capital, especially in cyber, fleet management and chipsets for embedded systems. “I think there’s still great startups at really good valuations that are still going to be needed in automotive, as well as in the autonomous space, that are fairly priced and crucial not only to autonomous but to the automotive industry as a whole.”

He also thinks there’s still a huge need in the cybersecurity area, that we are going to see a lot more companies than the ones that are already there, that the chipset and memory piece is going to be crucial for automotive.

The final session, which covered legislative and regulatory developments related to autonomous and connected vehicles, featured Anita Kim, a technology policy analyst at the U.S. DOT Volpe Center in Cambridge, and Charlie Ticotsky, policy director at Transportation for Massachusetts (T4MA), a coalition of organizations working on transportation policy in the state.

The session began with an overview of various legislative and regulatory developments affecting autonomous and connected vehicles, including two major autonomous vehicle bills that have been introduced in Congress: the SELF DRIVE Act, which passed the House and the AV START Act, which is pending in the Senate.

The SELF DRIVE Act would take the regulation of autonomous vehicles out of the hands of the 50 states, which is one of the driving concerns of the industry, and place on NHTSA the authority to regulate the design, construction and performance of automated driving systems. It would, among other things, also require NHTSA to promulgate a rule requiring manufacturers to submit a safety assessment certification for automated vehicles and driving systems. And it would require manufacturers to develop detailed cybersecurity and data privacy plans for automated vehicles.

The AV START Act, while different, contains many of the same elements.

Foley partner Chris Grigorian, who moderated the session, noted that there have been hearings and a lot of public discussion around these legislative proposals. He also noted that NHTSA has been conducting research in anticipation of updating its voluntary autonomous vehicle guidelines and initiating future rulemakings in this area.

Grigorian said there has been some hesitation to pursuing the legislation further among some Democrats in the Senate, which has only been exacerbated by the recent fatal accidents involving autonomous vehicles. Those concerns were evident in the recent nomination hearing for a new NHTSA administrator, who was peppered with questions about what the agency is doing to ensure the safety of autonomous vehicles.

NHTSA has also been very active developing voluntary guidelines for the manufacturers or autonomous vehicles, last year issuing its second version of the guidelines, which Grigorian described as “sort of a 12-step program” for autonomous vehicles. NHTSA is now in the process of updating those guidelines.

At the state level, California, which has been on the leading edge of regulating autonomous vehicles, has recently adopted a new regulation that allows testing and use of fully driverless vehicles on public roads, subject to a number of requirements involving safety, communications, training and certification.

Ticotsky talked about a report his agency put out 1 ½ years ago, called “Fast Forward,” which makes a number of policy recommendations around autonomous vehicles, including encouraging innovation, sharing data, planning for future infrastructure needs, and improving and expanding public transportation walking and biking network.

He also discussed a short, animated video by Zipcar co-founder and former CEO Robin Chase that lays out the “heaven and hell” scenarios that autonomous vehicles could usher in. He shares her optimism that AVs will prove to be a net positive, but only if they are shared and are electric.

Keynote

Dan Harple, the founder and CEO of Context Labs, a leader in delivering at-scale enterprise blockchain-enabled systems and in advising global market segments and countries on the development of highly efficient ecosystems and interoperable standards, closed the program with a keynote speech he titled, “The Digital Transformation of Mobility Convergence of the Digital Thread.”

Harple talked first about the idea that the world is an interconnected ecosystem, then discussed some of the challenges, opportunities and risks that presents, and ended with an overview of a new global initiative he and Context Labs co-founded called the Mobility Open Blockchain Initiative (MOBI).

MOBI is a consortium of automakers, startups, technology companies and others that account for over 70 percent of global vehicle production, including Ford, General Motors, and BMW. Using blockchain technology, which allows information to be stored on a decentralized database that no one owns but everyone can access, MOBI seeks to foster an ecosystem where businesses and consumers have security and sovereignty over their driving data, manage ride-share and car-share transactions, and store vehicle identity and usage information.

Overall, the three sessions and keynote revealed great optimism and opportunities within an evolving industry that revolves around cars for transportation and that new technology will continue to be at the forefront of change in the automotive industry.”

For more information on Foley’s Emerging Automotive Technologies Program and the topics covered in this article, please contact:

]]>https://www.techtransactionstoday.com/2018/06/21/protecting-ip-finding-investors-navigating-legislation-drive-discussion-at-foleys-emerging-automotive-technologies-program/feed/0Carrot or Stick: Strategies Successfully Encouraging EV Adoptionhttps://www.techtransactionstoday.com/2018/06/18/carrot-or-stick-strategies-successfully-encouraging-ev-adoption/
https://www.techtransactionstoday.com/2018/06/18/carrot-or-stick-strategies-successfully-encouraging-ev-adoption/#respondMon, 18 Jun 2018 08:00:31 +0000https://www.techtransactionstoday.com/?p=2318
In 2017, for the first time ever, Norway registered more electric and hybrid vehicles than traditional vehicles with internal combustion engines. Even in the United States, as of May Tesla’s Model 3 became the best selling vehicle in its segment, regardless of powertrain, beating out traditional stalwarts from the traditional German luxury marques. However, with...… Continue reading this entry]]>

In 2017, for the first time ever, Norway registered more electric and hybrid vehicles than traditional vehicles with internal combustion engines. Even in the United States, as of May Tesla’s Model 3 became the best selling vehicle in its segment, regardless of powertrain, beating out traditional stalwarts from the traditional German luxury marques. However, with all of the incentives surrounding EVs, it is important to take stock in the externalities driving consumers toward larger-scale EV adoption. The following is a list of some perks (“carrots”) and punishments (“sticks”) being implemented to encourage this shift.

Carrot: Tax Incentives

The current U.S. tax incentives, which survived the Tax Cuts and Jobs Act of 2017, have been much discussed, including in this blog. As a non-refundable tax credit, the U.S. incentives are targeted toward higher income earners who owe at least $7500 in federal taxes. Analysts expect these incentives to start phasing out by the end of the year for Tesla and GM and it will be notable to keep an eye on whether the phase out affects domestic EV sales for either company.

Norway takes a slightly different approach, with vehicles generally being subjected to a 25% VAT. Electric vehicles are exempted from this high sales tax, making them comparatively much less expensive to purchase. In some respects, the 25% VAT on conventional automobiles acts as a stick to discourage their purchase, but since the tax was adopted long before the EV exemption was introduced, the exemption should be seen as one of the most effective incentives driving EV ownership of any country. Also, unlike the U.S. tax approach, which centers around the federal income tax, the Norwegian approach does not discriminate based on income, apart from the baseline ability to purchase a new car.

Carrot: Freebies and Exclusive Access

In many cities, EV owners receive access to toll roads (and ferries in Norway) for free. Likewise, in London, EVs qualify for a 100% discount on the congestion charge. Lately, these perks have been on the decline (Norway is gradually phasing out its exemptions and Los Angeles is charging EV drivers, albeit at a discounted rate).

Governments have also introduced quality of life improvements to encourage EV adoption. Places like California, known for major congestion issues, allow single drivers with Clean Air Vehicle decals to access HOV lanes. Similarly, governments and businesses are starting to provide premium parking spots, often for free, exclusively for EVs.

Stick: Fleet Emissions Requirements

The United States sets out a Corporate Average Fuel Economy, or CAFE standard. This structure gives automakers the opportunity to balance inefficient large vehicles with smaller, ultra-efficient cars (often “compliance” cars) to achieve the desired end result of reducing overall fuel consumption and corresponding pollution. While the CAFE policies are structured in a way to benefit society and even enable potential cap-and-trade systems, historically the CAFE requirements have been weak. Fuel economy standards were mostly stagnant from 1985-2010, although they finally received a gradual upward push in 2007. Even then, for decades the CAFE penalties were unchanged as $5.50 for every 0.1 mpg below the standard until 2016, when NHTSA raised the penalty to $14. Spread over an entire fleet of non-compliant vehicles, and these penalties can add up to tens of millions of dollars for a manufacturer. However, when compared to the profits made on non-compliant cars, automakers may still find it worthwhile paying the penalties rather than investing in other powertrains or shifting their product mixes. In all, the CAFE standards would likely have much stronger efficacy if they were simply required to be met in order to sell any vehicles, rather than even giving automakers the option to pay the penalty.

Stick: Other Regulatory Penalties

In the wake of the diesel emissions scandal, CARB, the EPA, and VW agreed to a creative settlement, which aims to accelerate EV adoption. Rather than merely collecting a fine, VW must commit $2 billion to developing an electric vehicle charging infrastructure through a new entity, Electrify America. Rather than leaving it at an ephemeral promise to invest, the settlement even spells out an investment timeline with four $500 million installments every 30 months as well as CARB and EPA oversight. That’s not to say that there aren’t still fines being levied; California is collecting and reinvesting $423 million in subsidies for electric buses, trucks, and other vehicles.

What if the carrots and sticks both work?

For the time being, an ideal EV policy likely requires a mixture of both carrots and sticks. In the long run, if EVs truly become widespread and supplant the internal combustion engine, the carrots will have to disappear, as they are already wont to do, or risk disrupting vital infrastructure revenue streams. If both supply and demand sit squarely on the EV side of the industry, there is no more need for carrots to shift the market. However, even in this distant fully-electrified future, capitalism prevails and companies will try to cut costs and skirt regulations. For this truism, we can be certain that there will always be sticks.

]]>https://www.techtransactionstoday.com/2018/06/18/carrot-or-stick-strategies-successfully-encouraging-ev-adoption/feed/0Scooters – The Next Mobility Wavehttps://www.techtransactionstoday.com/2018/06/04/scooters-the-next-mobility-wave/
https://www.techtransactionstoday.com/2018/06/04/scooters-the-next-mobility-wave/#respondMon, 04 Jun 2018 08:00:23 +0000https://www.techtransactionstoday.com/?p=2305
Electric GPS-enabled scooter and bicycle rental companies like Bird, LimeBike, Spin and Jump Bike (acquired by Uber) are spreading across major U.S. cities like San Francisco, San Diego, Austin, and Washington, DC, driven by an influx of investment from venture capital focused on innovative mobility ideas. They are met with enthusiasm by some riders who...… Continue reading this entry]]>

Electric GPS-enabled scooter and bicycle rental companies like Bird, LimeBike, Spin and Jump Bike (acquired by Uber) are spreading across major U.S. cities like San Francisco, San Diego, Austin, and Washington, DC, driven by an influx of investment from venture capital focused on innovative mobility ideas. They are met with enthusiasm by some riders who can easily find a scooter or bike using an app on their phone, unlock it by scanning a code on the handle, and off they go. Cities and municipalities, however, are cautious to embrace the new technology (sound familiar?), citing a host of problems, including pedestrian injuries, people riding on sidewalks, riders not wearing helmets and unused scooters blocking walkways and critical access to curb space.

Some municipalities believe that these companies are so focused on growth that they are not paying enough attention to identifying solutions to the problems that arise from scooters that can hit speeds up to 15 mph and share sidewalks where people on foot and in wheelchairs usually travel. Aaron Peskin, an elected official from San Francisco’s Board of Supervisors has received thousands of complaints from frustrated residents. Responding to an angry coalitions of neighborhood, senior, disability, and pedestrian groups, city officials are forced to react quickly. San Francisco’s legislative body has already met to discuss a bill to give the city authority to remove shared scooters without permits or parked in the public right-of-way, penalizing the companies that own them and as of last month, its board of supervisors passed a bill requiring e-scooter rental companies to get city permits (since companies like Bird and LimeBike technically do not need business licenses under current city ordinances) to provide battery-powered scooters. The transportation department in Austin also presented city lawmakers with its own plans to regulate scooters.

City governments’ latest effort to balance the promotion of accessible transportation that could reduce traffic and CO2 emissions, on the one hand, with a general concern for public welfare and safety, on the other hand, is reminiscent of the conflict we saw between cities and ride-hailing startups like Uber and Lyft. Like its e-scooter counterparts, Uber also took a “launch first, ask questions later” approach to the initial rollout of its services and clashed with officials in its hometown and practically every other city it charged into. Like their ride-hailing predecessors, motorized scooter companies are now in the fold challenging regulators. They have the tough task of determining how private companies and their customers can use their streets without generating ill effects for the rest of the population.

Regulatory issues surrounding the mobility space (from scooters to the self-driving automobiles we normally write about) are a novel and now constant focus of government officials at all levels around the globe, and it appears it will remain that way for some time as investment and innovation continues at a rapid pace in the mobility space.

]]>https://www.techtransactionstoday.com/2018/05/21/emerging-automotive-technologies-program-may-22-2018/feed/0Drinking and Driving: How Driverless Cars Will Overturn South Dakota v. Dole to Push the Drinking Age Back to 18https://www.techtransactionstoday.com/2018/05/21/drinking-and-driving-how-driverless-cars-will-overturn-south-dakota-v-dole-to-push-the-drinking-age-back-to-18/
https://www.techtransactionstoday.com/2018/05/21/drinking-and-driving-how-driverless-cars-will-overturn-south-dakota-v-dole-to-push-the-drinking-age-back-to-18/#respondMon, 21 May 2018 08:00:29 +0000https://www.techtransactionstoday.com/?p=2279
The drinking age in the United States has historically teetered between 18 and 21. Under pressure surrounding the Vietnam War, Congress rolled back the minimum drinking age from 21 to 18 to reflect the draft age. Proponents of this rollback would argue that if draftees were old enough to fight for their countries, they should...… Continue reading this entry]]>

The drinking age in the United States has historically teetered between 18 and 21. Under pressure surrounding the Vietnam War, Congress rolled back the minimum drinking age from 21 to 18 to reflect the draft age. Proponents of this rollback would argue that if draftees were old enough to fight for their countries, they should be old enough to drink, following the same rationale that pushed the 26th Amendment through, dropping the voting age from 21 to 18.

This drinking age shift had unintended consequences as states started lowering their minimum drinking ages. Traffic fatalities for people ages 18-21 were on the rise and more particularly, “blood borders” started popping up where in neighboring states with different drinking ages, people in high drinking age states would drive to lower drinking age states in order to buy and drink alcohol before turning 21. In response to this crisis, Congress passed the National Minimum Drinking Age (“NMDA”) Act of 1984, which withheld federal highway funding (originally 10% and now 8%) from any state, that did not comply with a federally proposed minimum drinking age of 21.

The NMDA went into effect in July of 1984 and states began to adopt the new minimum age requirement. Meanwhile, the NMDA became the grounds for a seminal Supreme Court case: South Dakota v. Dole. The Supreme Court settled that Congress may withhold federal funding, in this case highway funding, unless a set of conditions is met by the states vying for the federal funding. The Supreme Court set forth a five-part list of requirements, including:

The exercise of the spending power must be in pursuit of the general welfare;

The condition must be unambiguous;

The condition must be related to the federal interest in the particular project;

The condition itself is not unconstitutional; and

The condition is not coercive.

When South Dakota v. Dole was decided, the Court glossed over the first three requirements, quickly concluding that they were met, and centered its opinion on the final two requirements. However, Chief Justice Rehnquist’s comments were informative for a challenge to the first and third prongs of the case in a driverless future.

With respect to the first prong, Rehnquist wrote, “Congress found that the differing drinking ages in the States created particular incentives for young persons to combine their desire to drink with their ability to drive, and that this interstate problem required a national solution.”[1] Notably, the claim for the “general welfare” is not based solely on the fact that people aged 18-21 are drinking, but rather on the concept of “ more importantly that non-uniform drinking ages incentivize these same young individuals to get behind the wheel to drive to states with lower minimum drinking ages, threatening safe interstate travel. However, with the proliferation of driverless vehicles, the ability to actively control a vehicle and therefore the well-known dangers currently associated with drunk driving should be removed from consideration in this prong. We are then left asking whether there is any other rationale for providing a consistent minimum drinking age between states in order to invoke the “general welfare.”

The challenge to South Dakota v. Dole gets even stronger when we consider the third prong. According to the Court, “Congress conditioned the receipt of federal funds in a way reasonably calculated to address this particular impediment to a purpose for which the funds are expended.”[2] If we conclude that driverless vehicles prevent drunk driving for all drivers, then the supposed impediment of young drunk drivers goes away. Without the hook of driving, there is no nexus between the minimum drinking age and roads, causing this prong to fail.

Even before the mass adoption of driverless vehicles, we may still see a challenge to the third prong, questioning whether the condition is reasonably calculated to address the underlying problem of drunk driving. In the 1980s, drunk driving was more prevalent among people ages 18-21 than among older adults. However, trends have shown a steep decline over the past three decades of teenagers pursuing their driver’s licenses. In fact, 16-year-olds are down 47% and 20-24-year-olds are down 16% from the time the NMDA was passed. With these trends, having fewer young drivers means less drinking and driving in the age group targeted by the NMDA. Further, the future of drunk driving is more likely to be found in an older age group than 18-21-year-olds. As a result, the minimum drinking age is potentially already no longer reasonably calculated to the issue of drunk driving.

It should be noted that the NMDA did not set a federal minimum drinking age, but rather incentivized (think more stick than carrot) states to adopt their own laws to encompass the federally-preferred drinking age. While the NMDA may see an eventual successful challenge, it will still take time to make changes to existing state laws, if they are made at all, and we may once again see a national patchwork of drinking ages over time. At the very least the states won’t have the pressure of highway funding holding them back anymore.

]]>https://www.techtransactionstoday.com/2018/05/21/drinking-and-driving-how-driverless-cars-will-overturn-south-dakota-v-dole-to-push-the-drinking-age-back-to-18/feed/0Foley's Automotive Technology Programhttps://www.techtransactionstoday.com/2018/04/30/foleys-automotive-technology-program/
https://www.techtransactionstoday.com/2018/04/30/foleys-automotive-technology-program/#respondMon, 30 Apr 2018 13:30:25 +0000https://www.techtransactionstoday.com/?p=2249
Join us for Foley’s Emerging Automotive Technologies: Tomorrow’s Trends Today where industry leaders will discuss fully connected and self-driving cars, improvements to alternative energy for vehicles, and several other technologies being used in the automotive industry. REGISTER HERE This program will showcase industry leaders, venture capitalists and legal professionals as they share insights around how companies...… Continue reading this entry]]>